Archive

“We are very opposed to Rep. McCauls’s proposals because, number one, it sends the wrong message that we are a militarized area, that we are an Afghanistan or that we are an Iraq. We are not. We have people that get up every day, that go to work, they come home. They go out to dinner with their families. They go to a ball game and nothing happens. This is not a war zone,” Patridge said, in an interview with the Rio Grande Guardian and KVEO News Channel 23, after the news conference had ended.”

Click LINK for FULL STORY authored by The Rio Grande Guardian: FULL STORY

We’d like to congratulate Jo Ann Brumit, CEO/President, Published Author, Hardworking Mother & Wife on a SUCCESSFUL 40 years of manufacturing business. Read story below written by our friends at The Valley Town Crier.

1. McAllen, TX

Bottom line: The number of solopreneurs isn’t growing at a breakneck pace in McAllen, but these entrepreneurs’ businesses are doing well financially. They also make a substantial contribution to the local economy.

Click the LINK for full list and rest of the story:http://blog.sparefoot.com/6384-top-places-for-solo-entrepreneurs/

FASTCOMPANY: “Introverts of the workplace are having a moment. The office furniture company Steelcase teamed up with Susan Cain, author of the bestseller, Quiet: The Power of Introverts in a World That Can’t Stop Talking, to create a series of five spaces that address the need for more focus and privacy at work.” -Mimi Zeiger (Fastcompany Magazine)

What’s so cool about Steelcase and living in McAllen, TX or Reynosa?

Steelcase owns and operates a 300,000 sq. ft. manufacturing facility that employs over 950 people in Reynosa. Not to mention, 500-700,000 chairs are made to order daily. Here is a picture of a few of our McAllen city commissioners at the Steelcase plant in September, 2013. There’s a reason why the maquiladoras in Reynosa are so successful!

For rest of the story: http://www.fastcodesign.com/3031341/steelcase-and-susan-cain-design-offices-for-introverts

The Rio South Texas Economic Council board of directors met at Brownsville City Hall on Thursday afternoon. (Photo: RGG/Steve Taylor)

BROWNSVILLE, April 25 – Rio South Texas Economic Council is speeding up a $200,000 national marketing campaign to counter what members say are negative stories about the border region in TIME and Texas Monthly.

Meeting at Brownsville City Hall on Thursday, RSTEC agreed to ask Washington, D.C., based DCI Group to start pushing positive stories about the Rio Grande Valley to reporters working for national media outlets.

“It is really important we get moving on this. I do not know if you have seen it but we made TIME magazine, a very negative story on South Texas as a war zone, and then we also made Texas Monthly and the whole damn publication is on the border and why the border becoming a combat zone,” said Keith Patridge, CEO and president of McAllen Economic Development Corporation and a board member of RSTEC.

The TIME article Patridge referenced is titled “10 Cities Where Americans Are Pretty Much Terrified to Live.” Citing a Gallup survey, the article states: “In McAllen, Texas, where Americans were least likely to feel safe, less than half of all respondents were comfortable outside of their homes after dark.” Click here to read the story.

The Texas Monthly article Patridge referenced is titled “Who Will Watch the Watchers?” by reporter Nate Blakeslee. Introducing the story, Texas Monthly Editor Jake Silverstein states: “Unless you happen to live along the United States–Mexico border, or have friends or family there, or are called by business or pleasure to travel through the region with regularity, it may have escaped your notice that over the past decade or so, that area of Texas has come to resemble an occupied territory.” Click here to read the intro to the story.

RSTEC comprises various cities, ports, counties and economic development entities in the Rio Grande Valley. The group has entered into a $200,000 contract with DCI Group for a national marketing campaign involving earned media and polling. Around 400 white collar workers from around the nation will be polled to ask how they view the Valley. “That is our target audience. We expect to have the results of that poll in the next few weeks,” said RSTEC Executive Director Alma Puente Colleli.

Eddie Campirano, executive director of the Port of Brownsville, chairs RSTEC. Discussing the national marketing campaign at the board meeting, Campirano said: “We have got to get this thing kicked off. Here we are entering into May and we still have not got this kicked off. I do not want to have a repeat discussion at the next board meeting. Let us get it done. I am happy we are getting this off the ground.”

The RSTEC board of directors voted unanimously to get moving with the national marketing campaign. Colleli said she would call DCI as soon as the board meeting finished. Interviewed by Sue Groves of Beyond ARTS RGV magazine, Colleli said she received a call from the director of a musical venue to say that a certain artist wanted to know if it was safe to visit the Valley for a performance.

“We have to put out the positive stories. We have a lot of successes here with companies that have located and expanded and done very well,” Colleli told Groves. “We have to start working on inserting ourselves on national stories, such as workforce, transportation, medical. This agency (DCI) has relationships with national reporters. It will be earned media. They will be pitching stories.”

Colleli said RSTEC members would pay for about half of the $200,000 for DCI. The other half, she said, would be raised from the corporate world, such as banks, hotels and car dealerships in the Valley. Corporations would be asked to pay $5,000 to help the national marketing campaign, Colleli said. For this they would be granted associate membership of RSTEC.

Interviewed by the Guardian after the RSTEC board meeting, MEDC President Patridge said that in addition to negative media coverage, the Valley also has to “fight back” against extremist language from certain politicians running for state and national office. “We are also caught up in the political campaigns with Dan Patrick making comments about how it is a war zone on the border. We are getting really hammered.”

Patrick is a state senator from Houston. He is expected to become the GOP nominee for lieutenant governor.

“It is critical we mount this national marketing campaign. If these negative stories and comments stand without any kind of rebuttal then people think these things are true. We are not big enough to take on the national media so we have to look at professionals to get our story out to rebut some of that information. We are going to be an issue on the state political debate and the national political debate because it all ties into the whole immigration debate. We are getting buffeted by a lot of things,” Patridge said.

Patridge also said it was not just state and national media outlets that were hurting the Valley with negative stories. He said some local TV stations were not helping matters.

“Channel 4 had a former tourism secretary of Tamaulipas telling people never to go over to his state because it is dangerous. Unfortunately, because of our location people think that violence is bleeding over to this side. Everyone is beginning to see this area as a war zone,” Patridge said.

“As that continues to be promoted by our media… Channel 5 does it, Channel 4 does it… I understand they are trying to gain viewership but the bottom line is they are killing their advertisers, the ones who make the newspapers and TV stations profitable. You are getting a lot of people saying I am not going to locate my company there or expand my company there. Which means people do not get jobs and then they don’t buy cars and then if they don’t buy cars the car dealerships are probably going to cut back on their advertising on Channel 4 and Channel 5. It is a vicious circle.”

Patridge said he was not proposing border violence be covered up. “But I want to know the facts. I do not want sensationalism in an attempt to gain a viewer or a rating or to sell newspapers. All of this coverage is having a result on our local people. They think it must be true because no one is saying anything to the contrary. Our political leadership is not saying anything.”

Patridge said he could not understand why local media outlets concentrate on border violence and not on all the positive things that are happening in the Valley. “The local community is saying yes, they understand what all this negative coverage is doing to us. It is almost like we are eating our young. Our own media are destroying us. I think it is something we just have to look at.”

Asked how long the contract with DCI would last, Patridge said: “It depends on how they do. We will review it in six months. We are looking for results. But, I think the campaign itself is going to be a long term campaign. I see it being at least a year and probably two or three years to turn this around. We are constantly being used as a whipping post for political campaigns or ratings. We have got to fight it.”

MX and the U.S. continues to grow despite “crime and safety” perceptions and sensationalism driven by the media

MX benefits from the North America Free Trade Agreement (NAFTA): 44 free trade agreements, which is more than any other country

By 2015, manufacturing-labor costs in Mexico are projected to be 19% lower than in China

The U.S. has an advantage since products made in Mexico contain 4 times as many U.S. made parts

Many factors are driving the economic growth

The Rio Grande Valley has a unique advantage with two options to choose from (US/MX) for manufacturing purposes, import/export, and competitiveness

China’s low-cost labor force wages, weak yuan, and high investment helped make it a manufacturing and exporting hub.

But over time, as the yuan appreciated, wage inflation ticked up, and supply chains became more complicated, multinationals started exploring other options.

In what’s been dubbed the American manufacturing renaissance, many U.S. companies have been reshoring operations.

However, another big beneficiary of rising Chinese labor costs and U.S. economic growth has been Mexico. This has come despite concerns about crime and safety.

Mexico benefits from the North America Free Trade Agreement (NAFTA). At 44, it also has more free-trade agreements than any other country. Mexico also benefits from having its natural gas prices tied to those in the U.S. where prices are substantially lower relative to the rest of the world.

Average electricity costs are about 4% lower in Mexico than in China, and the average price of industrial natural gas is 63% lower, according to a study by the Boston Consulting Group.

The same study found that by 2015, average manufacturing-labor costs in Mexico are projected to be 19% lower than in China. In 2000, Mexican labor was 58% more expensive than in China.

First, let’s take a look at what’s been going on in China.

The average urban, non-private-sector wage in China has climbed 14.2% per year between 2002 and 2012. While average wages in the private sector have grown at a slower pace, they too have grown. The key figure to watch is unit labor costs.

“As productivity gains slowed in recent years, the continued rapid wage growth has led to a robust growth in ULC – averaging more than 5% a year since 2008 in the urban non-private sector,” according to Tao Wang, a China economist for UBS.

Of course this is also in part because the yuan has appreciated over 25% against the U.S. dollar since January 2007. This appreciation (despite the recent modest depreciation) has hurt China, since “many of China’s competitors and trading partners saw their currency weakening against the green back,” writes Wang.

China’s unit labor cost has grown over 60% since 2007, in U.S.-dollar terms, which is the fastest growth among trading partners and competitors in part because of yuan appreciation, explains Wang.

In terms of labor-intensive manufacturing exports, China has lost market share to Vietnam and Bangladesh. But “in the transport equipment and parts sector, China has lost market share to Mexico in both the US and the EU,” writes Wang. This chart shows China has lost market share to Mexico:

And this is good news for the U.S., too. “It’s also good for America, since products made in Mexico contain four times as many U.S.-made parts, on average, as those made in China,” said Harold L. Sirkin, a senior partner at Boston Consulting Group in a report on Mexico’s growing cost advantage.

According to Marcial Nava, an economist at BBVA Compass, border towns should be expecting $1.2 trillion dollars worth of economic activity.

The United States is Mexico’s largest natural gas supplier, providing 80% of imports. More than 60% of the natural gas supplied comes from Texas through pipelines that link the Lone Star state with its southern neighbor. In 2012, the Mexican government only authorized the drilling of 3 shale oil and gas wells, a stark contrast to the 9,100 in the U.S. for the same period.

The reforms will remove the limitations that prevented international investment from developing Mexican shale plays, especially in the Burgos Basin, which is the portion of the Eagle Ford Shale that extends into Mexico. This play could hold more than 300 trillion cubic feet of technically recoverable shale gas, while Mexico’s other shale plays the Sabinas, Tampico, and Veracruz Basins – those are estimated to hold more than 1 trillion cubic feet of natural gas reserves.

MEDC had a great turnout at yesterday’s (October 28) press conference. The proposed Mexican tax reform could impact our maquiladora/manufacturing industry if legislation passes. See below for our print and broadcast coverage.

FROM THE MONITOR:

McALLEN — Tax reform legislation recently adopted by the Cámara de Diputados — Mexico’s equivalent of the U.S. House of Representatives — would roughly double the tax burden for many local maquiladoras, according to Reynosa plant managers.

Mexico would start taxing benefits provided to maquiladora workers and collect a new value-added tax on temporary imports. Combined with the legislation’s other new regulations, the effective tax rate for maquiladoras would jump to 37 percent.

Maquiladoras currently pay a much lower 17 to 19 percent effective tax rate, according to the Consejo Nacional de la Industria Maquiladora y Manufacturera de Exportación, an industry association for Mexico’s foreign manufacturers. Members have urged the Mexican Senate to kill or reduce any tax hike.

“This preferential tax rate was designed to bring investments to Mexico, which is approximately 40 percent of Tamaulipas’ economy,” said Joseph Olmeda, president of the Reynosa maquiladora association and plant manager for BSN Medical. “Obviously, the goose that lays that golden egg — they’re affecting it. And there may be longer term consequences not just to the state but to the international maquila industry.”

Mexico’s tax reform proposal would pump new money into public services and supplement falling revenue from PEMEX, the nationally owned oil company. Tax collection also remains a major problem. The Organization for Economic Cooperation and Development ranked Mexico last among 34 developed nations for tax collection in 2009.

The tax reform legislation would cost BSN Medical’s local maquiladora, which makes orthopedic products, roughly $1.3 million to $1.5 million annually, said Olmeda, the company’s vice president for manufacturing.

If Mexico doesn’t reduce the proposed tax burden, manufacturers may move production to other low-cost nations, Olmeda said, and re-evaluate shifting additional manufacturing from China to Mexico.

Any shift would have a major impact on Reynosa, where maquiladoras employ more than 90,000 workers. Manufacturing wages support an additional 360,000 to 450,000 jobs, said Dan McGrew, vice president of the national maquiladora association.

“We like to use those benefits because it’s kind of a win-win,” McGrew said. “There’s no tax to the company and all of it then flows through to the employee.”

Higher taxes on maquiladoras would also hurt the Rio Grande Valley economy, said Keith Patridge, president of the McAllen Economic Development Corp. Local manufacturers, truckers, warehouses and logistics firms all support Reynosa’s maquiladoras. If maquiladoras move elsewhere, American businesses will suffer, too.

“We’re not saying that the government of Mexico doesn’t need revenues and that (maquiladoras) shouldn’t pay their fair share. The whole issue is ‘fair share,’” Patridge said. “And when you’re looking at over a 300 percent increase for some of our companies under this proposition, we feel like that’s not fair.”

AUSTIN – A report released this week by the Brookings Institution is the latest to highlight the Lone Star State’s strong jobs climate, finding that Texas leads the nation in job creation with Austin, Houston, Dallas, San Antonio, Dallas and McAllen creating more jobs now than before the recession. According to the report, Austin saw the highest percentage increase in jobs of any city in the nation.

“Texas continues to set a national example for job growth, and I’m proud the Lone Star State is home to six out of the 14 cities that have more jobs now than before the recession,” Gov. Perry said. “Our low taxes, predictable regulations, fair courts, skilled workforce and low cost of living have made Texas the best state in the nation to live, work, raise a family and run a business.”